Greaves Cotton (₹84): Buy

The stock of Greaves Cotton gained 9.8 per cent accompanied by above average volume on Friday, surpassing a key resistance at ₹80. This rally provides traders with a short-term perspective an opportunity to buy the stock at current levels.

Following a medium term downtrend from late August, the stock took support at the long-term base in at ₹66 and bottomed out in early November. Since then, the stock has been on a short-term uptrend.

During the up-move, the stock surpassed the 21- and 50-day moving averages in mid-November and continued to trend upwards. In the past week, the stock has jumped 13.5 per cent with good volume. There has been an increase in volume over the past three weeks. The daily relative strength index features in the bullish zone and the weekly RSI is charting higher in the neutral region.

Moreover, the daily as well as the weekly price rate of change indicators are hovering in the positive terrain implying buying interest. The short-term outlook is bullish for the stock. It has potential to trend upwards and reach the price targets of ₹88 and ₹90 in the ensuing trading sessions. Traders can buy the stock with a stop-loss at ₹81.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)